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It’s time to sell assets to Royal Caribbean Group (NYSE: RCL). The company said on Tuesday it had signed a definitive deal to sell its luxury Azamara cruise line to well-known private equity firm Sycamore Partners. The prize, which must be paid entirely in cash, is $ 201 million.
In the world of large cruise operators, Azamara is a relatively small fish, made up of three medium-sized vessels – the Journey, the Quest, and the Pursuit. Sycamore Partners will be the new owner of this trio, plus associated intellectual property.
Royal Caribbean said it would use the proceeds from the sale to help develop its Royal Caribbean International, Silversea and Celebrity Cruises lines.
Image source: Getty Images.
In the press release announcing the sale, CEO Richard Fain said: “Our strategy has evolved to place more of our resources behind ‘the trio and’ work to develop them as we come out of this unprecedented time”.
The “unprecedented time”, of course, is the coronavirus era, which has been a horrific time for cruise ship operators due to the collapse of the global travel industry.
The company added that the transaction, which is expected to close this quarter, will result in a one-time impairment charge of $ 170 million. Given that Azamara is small compared to Royal Caribbean’s major cruise lines, the company said it is not expected to have a “material” impact on its future financial performance.
Unfortunately, he also probably won’t have a material impact on his chances of survival. With an estimated monthly cash consumption rate of $ 270 million while in slat down mode, it can last just over a year before its pile of greenery runs out.
By mid-afternoon on Wednesday, shares of Royal Caribbean were down 0.6%, compared to 1.5% in S&P 500 index.
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